The United Kingdom’s decision to leave the European Union will send ripples through the Kansas City area economy, though businesses are unsure how sharp that impact will be.
The U.K. is the fifth-largest trading partner for Kansas. The state exported $432 million worth of goods to Britain last year. Missouri exported $364 million worth of goods. Neither state provided a specific breakdown of the goods and services sent to the U.K.
Several EU countries are also key trading partners for Missouri and Kansas companies.
At least in the short term, trading will be affected as the pound and euro drop against the dollar.
But if there’s good news for area businesses, it’s that “Kansas City won’t be impacted as much as other metro areas,” said Marek Gootman, an analyst with the Brookings Institution in Washington, D.C.
Still, the Brexit vote only adds to concerns about the strength of the overall U.S. economy, said Kansas City area economist Chris Kuehl, managing partner of Armada Corporate Intelligence.
He said falling stock prices would be a short-term issue. On Friday, many investors retreated to safe currencies — the dollar, the yen and gold.
“I think the business community is waiting for some good news,” Kuehl said. “China’s growing again. Consumers in the U.S. are getting engaged again.”
But businesses generally hate uncertainty, and the uncertainty surrounding the U.K. and the global economy won’t be going away soon. Britain has two years to negotiate its withdrawal from the EU. But Bob Bradley, the managing partner for Bannockburn Global Forex in Cincinnati, said it will take longer than that to put the pieces back together.
A key component in the separation will be the country’s trade agreements. Right now the United States has deals with the European Union, not the U.K., he said.
“All of those trading agreements would go out the window,” Bradley said. “The U.K. will be starting from ground zero.”
Tyler Walston, a senior director at Kansas Global, a Wichita-based international trade consulting firm, said exporting for Kansas companies will be harder in the near term due to the rising strength of the dollar.
“In the future there may be some positive outcomes,” Walston said. “Immediately, there’s not a positive.”
Narbeli Galindo, who is in charge of international business for the Economic Development Corporation of Kansas City, said there shouldn’t be any concern for Kansas City companies.
“The announcement to separate from the EU will eventually affect the currency and pricing for companies looking to export to the U.K., but it is too soon to tell,” Galindo said. “Let’s allow time to better understand how this vote is really going to impact everyone, everywhere in trade.”
Several Kansas City businesses contacted Friday also took the wait-and-see approach.
Dan Smith, a spokesman for North Kansas City-based Cerner Corp., said the health care information technology company didn’t have an immediate reaction to the Brexit vote. Cerner has operations in Britain, but Smith suggested the effect on Cerner revenue is likely to be muted. That’s because global revenue made up 12 percent of the company’s revenue in 2015.
“Of that 12 percent global portion, no one country made up even 20 percent,” Smith said. “So the U.S. was 88 percent of our total revenue, and no other country was more than 2.4 percent of the total revenue.”
Greeting card giant Hallmark Cards, which has operations in England, said in a statement that it was too early to speculate.
VML, a global advertising and marketing firm based in Kansas City, has 19 overseas offices, including one in London. It doesn’t anticipate any changes for its global offices.
Ford Motor Co. said it might cut jobs at its British plants, The Wall Street Journal reported. The automaker employs about 14,000 in the U.K.
“We would expect that the combination of a softer industry and a weaker (pound) sterling would have an adverse impact on our operations in the long term,” the company said.
Bats Global Markets, a Lenexa-based electronic stock exchange with a European exchange in London, said trading reached a record 29.3 billion euros on Friday.
“We anticipate volatile markets globally surrounding the uncertainty of the impact of a potential Brexit in the coming months, and our top priority is the orderly operation of our marketplaces,” Bats Europe CEO Mark Hemsley said in a statement. “We remain laser-focused on the needs and requirements of our customers and will ensure they are fully apprised of our plans as we adapt to this new business environment.”
Cam Hoang of the New York law firm of Dorsey & Whitney advised companies to re-evaluate how “increased uncertainties in trade and regulation will impact the business.”
The Star’s Diane Stafford and Steve Vockrodt contributed to this report.